2012 Global Market report - NAI Global

Kansas City, Missouri
St. Louis, Missouri
Contact
NAI Capital Realty
Kansas City
+1 913 469 4600
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
2,044,888
2,081,972
1,108,660
$74,054
$58,283
Kansas City straddles the Missouri/Kansas border. The
region continues to show positive signs of recovery over the
last year. Private education, engineering, financial services,
healthcare and auto sectors provided recent gains and the
services sector should lead future employment gains.
According to a recent report, Missouri and Kansas are top
10 pro-business states which will improve job growth.
The industrial sector has been positively impacted with an
increased demand by auto manufacturing suppliers
supporting both the General Motors Fairfax plant in the
Wyandotte County submarket and the Ford Claycomo facility
in the Clay/Platte County submarket. In aggregate, over
1,000,000 SF of space has been leased over the last 18
months to this industry segment. This trend should continue
in the coming year with Ford’s new labor agreement which
includes a commitment by Ford to invest $1.1 billion and
create 1,600 new jobs in the Kansas City area.
The office market worsened in 2011 as vacancy increased
to 19.1% from 18.6%. Class A improved to 15.5% from
16.7% and Class B increased from 19.8% to 21.1%. Flight
to quality continued with pricing pressure in all classes.
Larger submarkets improved in Class A vacancy. Both
Midtown/Plaza and South Kansas City fell over 4%. Incentives
from states and municipalities drove shifts from Missouri to
Kansas, and to a lesser extent, vice versa. The incentive
practice is controversial as typically metro employment is
not increased. Johnson County, Kansas attracted many
deals with South Kansas City, Missouri, a distant second.
We expect continued drops in Class A vacancies in dynamic
submarkets with rents increasing incrementally by year end.
Absent of improved employment, metrowide Class B
vacancy rates will face pressure throughout 2012.
The retail market has improved, somewhat buoyed by
continued repositioning of several centers and the arrival
of new retailers. The Legends Center near the Kansas
Speedway converted to an outlet format. New retailers to
the area include Trader Joe’s (two locations), Nordstrom
Rack and Buy Buy Baby. Both Legoland Discovery and
Merlin Entertainment Aquarium have committed to Crown
Center in the CBD.
Contact
NAI DESCO
+1 314 994 4444
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
2,842,793
2,868,012
1,494,129
$64,336
$52,709
Through 2011, the St. Louis metro area employment has
expanded an average of 0.1% per month, mirroring and slightly
outperforming the national trend. Key industries that have
experienced stronger than average growth in 2011 include
transportation/distribution, health/education, manufacturing
and other services such as retail trade and administration. In
the second half of 2011 the Missouri coincident economic
activity index has begun to increase appreciably, pointing
towards the potential for improved growth in 2012.
After dropping below 8% at year end 2010, industrial vacancy
rates climbed to 8.8% during 2011. Less than 40,000 SF of
new space was delivered in 2011, a historic low, however
absorption stands at negative (912,892) SF for the year. This
has placed further downward pressure on asking rates which
have dropped by nearly 4%. Significant transactions in 2011
include Walgreens (500,000 SF), Cenevo Inc. (220,000 SF),
Waters of America (145,000 SF) and American Tire Distributors
(123,000 SF). A 139,000 SF building with 0% space
pre-leased is the only new project currently in development.
Office vacancy rates rose 1% in 2011 and rental rates are
still declining slightly; tenants continue to obtain lease
concessions. The high end Class A market is the brightest spot
in St. Louis’ office market, with positive growth seen in the
delivery of the National Records & Archives building (474,690
SF), which is 100% leased, and the 100% pre-leased BJC
Healthcare HQ (300,000 SF) currently under construction.
Other significant transactions include Peabody Energy
(215,362 SF), Amdocs (117,000 SF) and Emerson Electric
(72,000 SF).
In the retail sector both vacancy and asking rates have
stabilized over the past year. Mid-box stores have stepped up
their market activity. Discount retailers in particular are
expanding, including Big Lots, Aldi, Weekends Only Furniture
and Dollar stores. Walmart and Sam’s Club are planning
multiple new stores in the St. Louis metro. Kohls and Menards
are opening new locations in outstate Missouri. Nordstrom
opened its second St. Louis location, with a second Nordstrom
Rack to open in 2012. Two significant outlet malls are
proposed for the west St. Louis submarket, continuing the
trend of discount retail expansion.
Total Population
Median Age
36
Total Population
Median Age
37
Kansas City At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
Premium (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$
$
$
$
$
N/A
18.25
14.00
29.50
18.75
14.50
$
$
$
$
$
N/A
23.50
21.00
29.50
32.00
27.00
N/A
$ 18.30
$ 15.87
$ 29.50
$ 21.80
$ 17.16
N/A
15.40%
25.60%
100.00%
15.20%
18.50%
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
$
$
$
3.25
2.75
4.00
$
$
$
5.85
6.05
16.50
$
$
$
3.85
3.35
7.52
6.50%
8.30%
13.80%
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
$
10.00
8.75
14.00
13.00
$
$
$
$
24.25
26.00
23.65
35.00
$ 13.59
$ 12.32
$ 17.35
$ 25.75
5.80%
14.30%
6.80%
6.60%
deVeloPment land Low/Acre High/Acre
Office in CBD
$ 1,829,520.00 $ 3,789,720.00
Land in Office Parks
$ 163,350.00 $ 588,060.00
Land in Industrial Parks
Office/Industrial Land - Non-park
$
$
40,000.00
30,000.00
$
$
175,000.00
200,000.00
Retail/Commercial Land
Residential
$ 40,000.00
N/A
$ 1,089,000.00
N/A
St. Louis At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
$
$
$
$
$
$
$
$
$
N/A
16.00
11.00
30.00
20.00
15.50
2.75
2.00
7.25
7.00
8.00
8.00
12.75
$
$
$
$
$
$
$
$
$
$
$
$
N/A
23.00
16.00
35.00
30.00
20.00
5.50
5.95
12.00
20.50
22.00
20.00
39.00
$
$
$
$
$
$
$
$
$
$
$
$
N/A
19.25
14.60
31.00
23.25
17.50
3.80
2.75
9.00
11.20
12.60
13.40
15.95
N/A
12.10%
17.50%
4.20%
10.50%
11.70%
8.80%
31.00%
33.00%
4.20%
10.70%
8.90%
8.80%
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
$
$
$
N/A
174,240.00
87,120.00
45,000.00
$
$
$
N/A
392,040.00
324,522.00
304,920.00
Retail/Commercial Land
$ 174,240.00 $ 2,215,000.00
Residential
$ 21,780.00 $ 522,720.00
2012 Global Market Report n www.naiglobal.com 109